Missed Your S Corporation Election Deadline? Here’s What to Do

If you meant to elect S corporation status but missed the deadline to file Form 2553, don’t panic — the IRS offers relief for a late S corporation election under certain conditions.

Why It Matters

Filing Form 2553 on time lets your business be taxed as an S corporation, meaning income passes through to the owners and helps you avoid double taxation (as with C corporations) or overpaying in self-employment taxes (as with sole proprietorships and partnerships).

Late Election Relief

The IRS allows late S election relief under Revenue Procedure 2013-30 if you:

1. Intended to be an S corporation as of the effective date.

2. Missed filing Form 2553 by mistake.

3. Have consistently filed and reported as an S corporation since that time.

4. File the late election within 3 years and 75 days of the intended effective date.

You must also include a short statement explaining your “reasonable cause” — for example, you assumed your accountant filed it, or you didn’t realize a separate election was required.

How to File

1. Complete Form 2553 as usual.

2. At the top, write: “FILED PURSUANT TO REV. PROC. 2013-30.”

3. Attach your reasonable cause statement explaining the delay.

4. Submit the form to the IRS or attach it to your first S corporation tax return (Form 1120-S).

If approved, the IRS will issue a notice confirming your S corporation status retroactively.

Common Mistakes

• Waiting too long — even though there’s a relief window, act promptly.

• Forgetting shareholder signatures on Form 2553.

• Not maintaining eligibility (e.g., more than 100 shareholders, non-U.S. owners, or multiple stock classes).

Why It’s Worth Fixing

Electing S corporation status can reduce self-employment taxes and make profit distributions more tax-efficient for small business owners. Late relief ensures your business is taxed as intended without unnecessary penalties or complications.

Final Tip

If you missed your S election or aren’t sure whether you qualify for late relief, reach out to a CPA experienced in business entity setup. Filing correctly now can save you significant tax costs later.